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Stocks struggle to hold gains, Trump rejects 'globalism' at UN

U.S. stocks closed mostly lower the day before the Federal Reserve is scheduled to unveil its latest monetary policy decisions and economic forecasts for 2021.

The S&P 500 (^GSPC) fell 0.13%, or 3.8 points, while the Dow (^DJI) slipped 0.26%, or 69.8 points at market close Tuesday. The Nasdaq (^IXIC) rose 0.18% to, or 14.2 points, boosted in part by a gain in shares of Amazon.

U.S. indexes fell earlier in the day following President Donald Trump’s speech at the United Nations General Assembly, during which he asserted that China has been taking advantage of the U.S. in trade.

“We will never surrender America’s sovereignty to an unelected, unaccountable, global bureaucracy,” Trump said. “America is governed by Americans. We reject the ideology of globalism and we embrace the doctrine of patriotism.”

Trump’s speech comes in the wake of continued trade tensions between the U.S. with China. Neither China nor the Trump administration, whose latest round of tariffs on $200 billion in Chinese goods went into effect after midnight on Monday, have shown signs of letting up in the trade war. China called off plans for trade talks with the Trump administration and went forward with retaliatory tariffs on $60 billion in U.S. imports Monday. It’s as of yet unclear whether Trump will roll out levies on another $267 billion in Chinese imports in response to Beijing’s counter-tariffs, which he has previously considered.

Speaking at the United Nations General Assembly, Trump also addressed some of the ongoing concerns with other countries. He said Iran’s leaders, “plunder the nation’s resources to enrich themselves and to spread mayhem across the Middle East and far beyond,” and reiterated that new sanctions will hit Iran at the beginning of November. Prices of brent crude rose as Trump renewed calls for OPEC nations to lower oil prices, before settling at around $82 per barrel.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., September 21, 2018. REUTERS/Brendan McDermid

“We believe Instagram has been a strong growth driver for FB and has played a critical role in retaining younger users within the group of FB platforms,” JPMorgan analysts wrote in a note, adding that the loss of leadership will likely “pressure shares” in the near term. They projected approximately $7.5 billion in revenue for Instagram this year, representing about 14% of Facebook’s advertising revenue.

An executive reshuffling took place at two of Europe’s biggest lenders after Banco Santandar announced it had appointed Andrea Orcel, head of UBS investment bank, as its next CEO. Orcel replaces José Antonio Álvarez, who has served as CEO since January 2015 and is shifting to a role as vice chairman. Piero Novelli, current UBS executive chairman of corporate client solutions, and equities chief Robert Karofsky will serve as co-heads to replace Orcel at UBS, the Swiss bank said in a statement.

Orcel’s appointment “will help us achieve our ambition to build the best retail and commercial bank, as well as a global digital platform, whilst preserving our proven subsidiary model,” Ana Botín, executive chairman of Banco Santander, said in a statement. Santander’s new appointments will be effective in early 2019 following regulatory approval.

M&A

The restaurant chain Sonic Corp. will be acquired by Inspire Brands, the parent company of Arby’s and Buffalo Wild Wings, in a deal valued at $2.3 billion, according to a statement released Tuesday. Sonic holders will each receive $43.50 per share in cash as part of the deal, which includes the assumption of Sonic’s net debt. The agreement has been unanimously approved by Sonic’s Board of Directors and represents a premium of around 19 percent to Sonic’s price at the close on Monday.

Comcast (CMCSA), which won out over Fox (FOX) and Disney (DIS) with a $40 billion bid for Sky (SKY.L) over the weekend, said Tuesday that it had purchased more than 30 percent of the European broadcaster. The company said it will continue to purchase shares of Sky at £17.28, or $22.60, per share. Disney owns Fox’s 39% stake of Sky and has not formally announced plans for what it will do with its shares.

Shares of BMW (BMW.GR) fell after the German car-maker updated its guidance for the current financial year, indicating that it would not meet its full-year target of reaching a flat pretax profit. The company lowered its revenues forecast in the automotive segment as well as its EBIT margin, which is now expected to be at least 7%, versus the previous guidance of 8% to 10%. BMW cited increased competition following new emission rules and continuing international trade conflicts in its reasoning for the revisions.

Shares of the British Columbia-based medical marijuana company Tilray (TLRY) surged after the company announced it is exporting medical cannabis to sick children in Australia. The stock rose 8.4% to $107.88 per share at market close Tuesday.

Dunkin’ Donuts changed its name to “Dunkin’” as the company tries to emphasize its coffee and breakfast offerings beyond its signature pastries. The new branding will be effective January, the company said. Earlier this week, Weight Watchers trimmed its name to “WW” to reflect the company’s shift toward overall health, rather than just weight loss.

ECONOMY: Fed continues latest policy meeting

The Federal Reserve began its latest policy meeting Tuesday, with a monetary policy statement set for release at 2 p.m. ET on Wednesday, followed by a press conference by Fed Chairman Jerome Powell. The central bank is anticipated to raise its benchmark interest rate by 25 basis points to between 2% and 2.25%, which would mark the third interest rate increase this year.

The Consumer Confidence Index reached 138.4, exceeding average analyst estimates of 132.1, and hitting its highest level since 2000, the Conference Board reported Tuesday. The previous revised confidence index was 134.7 for August.

Tuesday’s soaring consumer confidence results suggest that tariffs on Chinese and other manufactured U.S. imports have not hampered overall household sentiment, Natixis analysts Joseph Lavorgna and Thomas Julien wrote in a note.

“Consumers clearly feel giddy,” they said, adding that the health of the labor market has also contributed to the optimism.

But surging consumer confidence, coupled with low unemployment and generally strong U.S. markets, could lead to future monetary tightening from the central bank, the analysts added.

“Given the Fed’s institutional bias to treat low unemployment as the primary driver of inflation, today’s good economic news is likely to elicit more tightening down the line,” they said. “This would be a mistake, because many forward price indicators such as inflation expectations remain well anchored.”